AIB set for record tracker mortgage fine from Central Bank
The Central Bank is set to hit AIB with a record fine later today for its role in the tracker mortgage issue.
The banking group, which includes EBS, is said to have set aside €70m to cover the fine, which resulted from an enforcement investigation that has been running since 2017.
Over 9,000 AIB customers were incorrectly deprived of tracker mortgages, or were put on the wrong tracker rates.
Another 5,900 cases were admitted by AIB in 2020 after it lost a case with the Financial Services Ombudsman.
The bank has spent almost €600m on legal advice and compensation for those affected by the issue.
AIB chief executive Colin Hunt said in April that he wanted to see the regulatory investigation completed this year.
“My ambition is to do everything in my power to restore the reputation of AIB,” he said at the time.
He added that the resolution of the tracker mortgage issue was “critical to that ambition of mine.”
Tracker mortgages are home loans where the interest rate is pegged to the main European Central Bank rate, with a fixed additional margin for the bank issuing them.
So far the Central Bank has imposed around €82m in tracker fines on four lenders in the past two years.
The Central Bank’s enforcement action against Permanent TSB, published in 2019 alongside a €21m fine, found it had failed to warn certain customers that they would lose their tracker mortgage entitlements as a consequence of their request to break early from a fixed or discounted interest rate.
KBC Bank Ireland was also fined €18m for failing to adequately warn customers that they would not be able to return to a tracker rate from a fixed rate.
The Central Bank also last year fined Ulster Bank Ireland a record almost €38m for dozens of regulatory breaches in its handling of its tracker mortgage customers.
Bank of Ireland has yet to be fined for its role in the tracker scandal but said it has set aside €94m of tracker-related provisions at the end of last year, including funds for an expected fine.